Former Toyota CEO Koji Sato used one of his last major appearances to send a message that sounded less like a routine corporate caution and more like an alarm bell. Speaking to about 700 executives from 484 supplier companies at Toyota’s annual supplier meeting on March 25, Sato warned that the industry’s old habits were no longer good enough, citing his speech as saying, “We will not survive until the situation changes,” according to reports. A few days later, Toyota confirmed that Sato would move to vice president and chief industrial officer on April 1, with Kenta Kohn taking over as president and CEO.
That warning is significant because it comes from a company that has spent decades setting the global standard for manufacturing discipline. Toyota is set to become the world’s best-selling automaker in 2025, despite production declines in some regions and intense Chinese competition. When a company of Toyota’s scale and reputation starts talking openly about survival, the point is not that collapse is imminent. The point is that the competitive landscape beneath the global auto business is moving much faster than many traditional carmakers expected.
Photo courtesy: BYD.
It’s tempting to discount China’s growth in the value story, but that only captures part of what’s happening. BYD had sold 4.6 million vehicles in 2025, though growth slowed sharply and profits came under pressure from a domestic price war. The company still entered 2026 with a major overseas push, first talking about exports up to 1.6 million, then adjusting to a lower target before expressing confidence it would reach overseas sales of 1.5 million. That’s the scale legacy automakers are now responding to.
A deeper issue is control over the most important parts of the EV value chain. The IEA said China would account for nearly 80% of global battery cell production in 2024, giving its automakers and suppliers a huge structural advantage. CATL has become the world’s largest EV battery manufacturer, while BYD has become a dominant force not only in finished vehicles but also in battery and charging technology. So the Chinese challenge is much more than the sticker price. It’s about supply chain control, speed of implementation, and the ability to move new technology into production quickly.
China’s auto growth is also no longer limited to traditional manufacturers. Huawei’s intelligent automotive solutions business will grow 72.1% in 2025, while Xiaomi has already become a meaningful EV player after entering the market with the SU7. Reuters also reported that Chinese EV chassis and software could save global automakers billions of dollars and years of development time. It’s a very different competitive threat that Western and Japanese brands have spent decades preparing for.
Photo courtesy: Too bad.
Not all established automakers are in the same position. Volkswagen is trying to more aggressively localize a new generation of small, low-cost EVs in Europe, with projects like the Cupra Raval and the Skoda Epic in China. Renault, meanwhile, is leaning on the idea that affordable EVs are still important, reviving models like the Twingo and at the same time pushing ahead with its overseas expansion. Those are expensive, complicated transitions, but at least they suggest a clear strategic direction.
For many Japanese automakers, the situation looks even more uneasy. Honda has already scaled back parts of its EV plan to focus more on hybrids. Nissan has moved to shut down production at its Wuhan plant in China as it restructures. Mitsubishi has already stopped vehicle production in China, and even Skoda, a European brand once heavily invested there, is now leaving the Chinese market by mid-2026. They are not isolated footnotes. They’re a sign of how quickly China has become a brutally difficult place for slow-moving legacy brands.
Photo courtesy: Autorepublika.
What made Sato’s message particularly important was that it was not just about Chinese rivals. It was also about Toyota’s own cost structure and habits. Toyota has for years operated what it calls “Smart Standard Activity,” a supplier-focused effort to eliminate excessive quality requirements that add cost without adding customer value. In supplier materials, the company admitted that it had forced suppliers to scrap parts over cosmetic issues on components customers had never seen. This aligns with reports that Toyota once rejected a large number of wire harness connectors and other hidden parts due to minor appearance defects with no functional impact.
This is the real subtext of the crisis warning. Toyota is not suddenly giving up on quality. It is acknowledging that standards, procedures, and cost estimates built for an earlier era can become liabilities if they are not continually reexamined. In a market shaped by software speed, battery economics, and relentless Chinese competition, legacy automakers can no longer treat time, cost, and manufacturing complexity as secondary issues.
Europe and the United States still have powerful brands, deep dealer networks, engineering talent, and decades of consumer trust. Those powers are real. They are also not permanent benefits. If they aren’t matched by competitive battery technology, faster software development, and products people can actually buy, the gap will widen. Toyota’s leadership transition took place on April 1, but Sato’s message before leaving was bigger than a company or a succession plan. If Toyota also believes the industry has entered a fight for survival, everyone else should take note.
This article originally appeared on Autorepublika.com and has been republished with permission by Guessing Headlights. AI-assisted translation was used, followed by human editing and review.
